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What Went Wrong in the CDO Market

Nice wrap - but you fail to address the primary problem with these securitization schemes: that the conditions underlying the underwriting of the base debt do not change once the ability to sell said debt is more profitable than issuance itself.

The methods you outline do not resolve this issue - there is nothing to prevent a redux of liar loans, etc as securitization itself creates a conflict of interest for the loan brokers.

This amounts to a complimentary article on Communism: great political philosophy of only human being truly all acted "from each according to his ability, to each according to his need" as opposed to "gain power and keep it by sticking it to everyone else"

Without a Widespread Economic Crash, a Housing Crash Is Unlikely

"Here's my theory: the value of housing is roughly what the purchaser population can afford per month (a figure that will move up and down to some degree with interest rates of course) multiplied across the economy, PLUS whatever speculative and second-house market there is. "

You did not address the issues of the subprime, Alt-A, and neg-am mortgage market segments essentially gone as of today.

Given that these were 40%+ of all mortgages made and further contributed to the (short term) affordability of houses, how does this jibe with your assertions?

The 'Scandal' Of Options Backdating

Are you a paid shill for options committees?

Options backdating is like saying embezzlement doesn't harm anyone.

Sure, there is no smoking gun and dead body, but a crime has been committed nonetheless.

As for it being questionable whether Uncle Sam was harmed or not - how can you say there was no harm done when the top 5 tech companies from 1995 to 1999 paid almost no taxes? With billions of profit?

Furthermore the reason why companies were backdating options was not simply to give more money to themselves - options backdating also occurred for employees.

Why?

Because - as you SHOULD know - a company can write off the difference between the exercised option grant cost and the actual sale price.

Thus while the employee gains some income - the company gains a nice tax writeoff with zero risk.

Don’t Fight the Fed? Why Not?

Regarding BFAM: would not a credit crunch = less money for corporations = less money for benefits such as corporate subsidized child care?

Whole Foods Market: 80 Bucks for Two Bags of Groceries

Safeway near the baseball stadium has heirloom tomatoes... my 2 cents

The Long Slide Of eBAY's Gross Merchandise Volume Growth

Increasing Ebay fees coupled with the Paypal virtual monopoly is not holding up in the face of services like Craigslist.

Ebay has become more and more exclusively an outlet for 'hot' merchandise, cut-rate accessories from wholesalers operating out of China, and overstock retailers.

Only those with ridiculously large profit margins can build a lasting business on Ebay.

These issues coupled with Ebay's loss of place as the 'cool' way to sell stuff online, means that Ebay will continue to grow due to the even larger issues facing print classified ad media, but in turn Ebay will lose the long tail which led to its emergence.

Reconsidering Citigroup: The Middle Line And 3D Marketing

I'm no expert, but my suspicion is that having consumer banking will be a net positive should the liquidity glut dry up.

At present money is very cheap to come by - due to Fed policies.

However, it is not very difficult to see a scenario where the present spending/negative savings scenario reverses both on the consumer and the commercial front. One of the bigger probabilities for this to happen is a collapse in the dollar - which in turn would drive interest rates up due to inflation increasing.

While this certainly would impact the lending side (and M & A, and securitization, etc) parts of the big bank financial models, I do wonder whether this is more or less adverse than a lack of credit to extend.

How To Profit Off Liquidity Drying Up

I think more detail is needed for truly useful advice:

1. high quality bonds;

You mean like the AAA and AA rated MBS' and CDOs?

2. large cap stocks;

Which ones are not buying back shares thus making themselves look good? Also the ones which don't need large amounts of cheap loans?

3. defensive sectors such as health care and consumer staples;

A rising tide lifts all boats. An ebbing tide does the opposite. 'Defensive' in this context just means you lose less money.

4. a more conservative mix of developed and emerging markets, and

If you mean invest less in developing countries, this would make sense

5. dividend and income strategies

See #2

How To Profit Off Liquidity Drying Up

I think more detail is needed for truly useful advice:

1. high quality bonds;

You mean like the AAA and AA rated MBS' and CDOs?

2. large cap stocks;

Which ones are not buying back shares thus making themselves look good? Also the ones which don't need large amounts of cheap loans?

3. defensive sectors such as health care and consumer staples;

A rising tide lifts all boats. An ebbing tide does the opposite. 'Defensive' in this context just means you lose less money.

4. a more conservative mix of developed and emerging markets, and

If you mean invest less in developing countries, this would make sense

5. dividend and income strategies

See #2

Chinese Growth: An Issue of Supply, Not Demand

Illuminating thoughts.

Most of the observations are true to my own experience.

I do believe that insufficient consideration was given to the harmonious society thread.

Keep in mind that unlike Russia, the original 'Long March' individuals are still well represented in China's government.

These individuals know from personal experience what inequality can mean to a status quo.

The ideological facade is only useful so long as no large demographic group feels alienated enough to actively agitate for change. China has significant Muslim areas which are restive under the atheistic Communist rule, also Tibet. On top of all this is also the rural/urban divide - the gains made under the recent decade of China's new policies have not been shared equally.

Lastly the Wild West portion - this is a very good characterization. However, again the inherent social injustices which China is permitting - perhaps even encouraging - in order to maintain short/medium term labor competitiveness, this is specifically what Marx argued as the spur for overthrow of the capitalist society.

Google's Miss: A Wakeup Call For Investors

Google is doing great things in their core business, also they are aggressively expanding abroad.

Just look at their hiring in Russia and other places.

However, my questions are as follows:

1) Google has invested significant money in businesses other than search advertising. I have yet to see significant ROI or even return on this money. If this doesn't change soon, it means Google is just like MSFT: great core business, great at losing money at anything else

2) Google's international presence is not impressive. The tech base/MySpace/Youtube core is absolutely US; if either the international market is not ready and/or Google is not able to extend their dominance internationally, then again all these growth projections based on US economies of scale extended to the world are pipe dreams. Clearly in Asia Google is not succeeding - Korea, China, and Japan all have incumbent dominant internet presences. In Europe the picture is less clear.

No matter what, Google's wonderful promise will have to execute in these 2 areas in order to justify continued share price growth.

Investors Punish Google for Increasing Expenditures

Who is William Buffet?

If you mean Warren B., then you should at least mention Warren B. care-abouts like cash flow, return on investment, etc.

Remaining Cautiously Optimistic On the Market

Your arguments might be stronger if you picked some examples not subject to hype.

Satellite radio - nice technology, very poor financial performance
Gmail - wasn't free email popularized by Microsoft? Started in 1998 vs. Gmail's 2004?
Online classrooms - Get YOUR degree in 6 weeks! 'nuff said
iPhone - I'd believe the technology more if I were not literally surrounded by Aapl billboard ads. Aapl's ad spending numbers are not easy to find, but I have a hard time calling Apple a technology company when their R & D spending is 4% of their overall sales (2006). Their general expenses, including marketing, is 17%. To compare: Intel's R & D is 16.6% of sales with general being 17.2%. But Intel has capital equipment and has many more employees, furthermore is in a down revenue phase due to the price war with AMD.

Excess Liquidity: Who's Left Holding The Bag?

Buffett warned about derivatives from his own painful experiences at Berkshire due to General Re's derivatives division.

Hence my giving much greater credence to his statements than OPM Greenspan.

The American Economy Is More Than Holding Its Own

Nice optimism.

The question is whether the plankton theory is right:

Can the US economy survive with just the technical/financial/ma... elite thriving while every other American loses purchasing power?

Let them eat Cake!